GREAT EASTERN EXPORTS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In all these appeals, we are concerned with the manner in which profits and gains of the business are to be ascertained before computing the relief under Section 80HHC of the Income Tax Act (hereinafter would be referred to as "the Act"). There are certain deductions which are allowed under Section 80IA of the Act as well. Therefore, to put it precisely question for consideration is: once a particular Undertaking or Enterprise becomes entitled to claim and is allowed deduction of certain amount of the profits and gains under Section 80IA of the Act, whether deduction to the extent of such profits claimed under Section 80IA would not be allowed for computing deduction under Section 80 HHC or whether the profits and gains are to be computed and deduction undertaken independently all over again, irrespective of the deduction already claimed and allowed under Section 80 IA of the Act. This question revolves around the interpretation which is to be given to Sub-section (9) of Section 80IA of the Act and that provision reads as under:

(2.) It is manifest that a the plain reading of the aforesaid provision suggests that the amount of profits and gains claimed by the Assessee and allowed to it under that provision is not to be allowed again and to the extent of such profits and gains, the profits and gains are to be reduced to that extent while claiming deduction under other provisions under the heading "C-deductions in respect of certain incomes" and that would include Section 80HHC. According to the counsels for the Assessees, however, the answer is not that simple and they exhort us to examine the question in the context of the aim of Chapter VIA which contains these provisions and also the case law which has emerged on the interpretation thereof.Therefore, before reverting back to the question again, we would like to traverse through relevant provisions of the said Chapter as well as case law relied upon.

(3.) Chapter VIA of the Act deals with certain deductions. It is in three parts. Part A described as "General" details the scheme of deductions. Part B enumerates specific deductions which are allowed in respect of certain payments and Part-C contains the provisions for allowing certain deductions in respect of profits and gains from business. A reading of the provisions falling in Part-A would demonstrate that deductions under this Chapter are to be made from "the gross total income". Various kinds of deductions are provided in Part B and C. However, the general provision contained in Section 80A mandates that the aggregate amount of deductions under this Chapter would not exceed "the gross total income" of the Assessee. Section 80 A reads as under: